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Bridges Cancun Update Issue 1 UNFCCC COP 17, Durban 2011 27 November TRADE ISSUES IN THE SPOTLIGHT ON THE EVE OF COP 17 One word can sum up the outlook for the Durban Conference of the Parties (COP) this year: uncertainty. But that may not be all bad. Last year’s meeting in Cancun, Mexico showed us all that sometimes low expectations may be the best way to get results at climate negotiations. Jump back a year further to 2009, when many observers said that parties meeting in Copenhagen, Denmar
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    ridgesCancun Update Issue 1 UNFCCC COP 17, Durban 2011 27 November  TRADE ISSUES IN THE SPOTLIGHT ON THE EVE OF COP 17 Visit ICTSD’s website to subscribe and to access Bridges Durban Updates in multiple languages:    One word can sum up the outlook for the DurbanConference of the Parties (COP) this year: uncertainty. But that may not be all bad. Last year’s meeting in Cancun, Mexico showed us all that sometimes low expectations may be the best way to get results atclimate negotiations. Jump back a year further to 2009, when many observers said that parties meeting inCopenhagen, Denmark, were poised to deliver a new binding treaty for climate change cooperation. Instead,great expectations resulted in a mighty flop.Disappointment in Copenhagen cost many globalleaders a good deal of political capital  –  leaving themunwilling to make such a gamble the following year. But whether pre-COP doldrums prove to be a magicformula for lifting the fog at UNFCCC COPs remainsto be seen. The show bill for this year includes severaloverview agendas and an array of unfinished texts, making it impossible to tell how this year’s climate spectacle will unfold. Future of Kyoto up in the air By all accounts, the headliner at this yea r’s COP is theKyoto Protocol. Signed in 1997, the Protocol’s first and, to date, only period of implementation  –    “commitmentperiod” in climate parlance –  began in 2008 and will endin 2012. The Protocol envisages a second commitmentperiod, and countries have spent over a decadenegotiating the finer details of what the future of theProtocol would be. An array of influencing elements has derailed progress on the next term’s negotiations, and only a handful of redeeming qualities may keep theagreement alive.One glaring shortcoming of Kyoto is the failure of theUnited States to ratify, despite having negotiated andsigned the agreement alongside all other signatories. TheUS is the largest historical emitter and held the recordfor highest annual emissions until 2009, when it wassurpassed by China. Its absence from the game is amajor imbalance in the equity of the multilateral climatesystem, to say the least. But more importantly, considering the US’ contribution to the problem, their absence from full participation in Kyoto  –  or any othermultilateral climate agreement, for that matter  –  willensure that the problem remains inadequately addressed.Solving the global problem, according to scientists andeconomists, requires the participation of all majorplayers. The US has adamantly and clearly refused tojoin the Kyoto Protocol, and therefore the new round of negotiations launched at Bali in 2007 were intended, in part, as an “on - ramp” for their participation. In addition, the new round, known as the negotiation onLong-term Cooperative Action (LCA) was a way to asubstantially increase the role of the other big players:the major economies among the developing countries  –    which have no commitments under the Protocol  –  arenow at the top of the list of carbon emitters. However,the LCA process has sent Kyoto into a tail spin, becausemany developed countries would now like to shelve theold agreement and replace it with something based onnew rules and principles. The developing countries,negotiating primarily as the G77 and China, hold tight tothe overarching framework of the UNFCCC and insiston a new commitment period for Kyoto. One reason isbecause Kyoto is premised on principles and rules thatdeveloping countries consider to be fair and equitable,such as developed countries taking the lead in carbon emissions reductions and the respect for the former’s overriding development concerns. The sum of these twocomponents specifically translates in the Convention tofinancial and economic support for developing  countries’ climate change mitigation and adaptation activities. For developing countries the LCA would be acomplementary agreement to the Kyoto Protocol, ratherthan a replacement. That said, Japan and Russia indicated this past year thatthey do not intend to sign on to a second period forKyoto. However, a special voting rule and a handful of tools created within the Protocol may still lead to thesurvival of the agreement. These tools include the “flexibility mechanisms” –  such as the CleanDevelopment Mechanism, Joint Implementation, andthe Emissions Trading Schemes  –  that were created tohelp developed countries to meet their mitigationcommitments; perhaps more importantly, these tools arethe primary platform upon which the current globalcarbon market is based. An end to the Protocol could, intheory, topple the multi-billion dollar market. But alittle-talked-about voting rule  –  which provides that inthe absence of full agreement a three quarter majority  vote could suffice to trigger a second commitmentperiod  –  may just prove to be enough to hold Kyototogether for now. The fact of the matter is that, while the LCA hasgenerated a number of key agreements on certainaspects of its mandate, it has not concluded talks onemissions reductions, which is at the heart of solving theclimate problem. Until it does, the Kyoto Protocol is theonly concrete agreement on emissions reductions.  Trade issues loom ever larger on the horizon Recent years of negotiation have seen a steady rise indiscussions on the potential role of trade measures onthe impacts of and responses to climate change. Inparticular, Durban will host the second part of a special “forum” on the impacts of domestic measures taken to combat climate change upon other countries . “Response  Bridges Durban Update 27 November 2010 Issue 1 Visit ICTSD’s website to subscribe and to access Bridges  Durban Updates in multiple languages:    measures,” as they are known in the negotiations, have been discussed in different ways for years, but haveprimarily been associated with the possible harm to oil-producing economies that may arise from a potentialglobal decrease in oil consumption. A rise in domesticprotectionist measures and debates on designing policiesand measures with global trade implications,nonetheless, have pushed the issue closer to the top of the negotiating agenda for several countries. The response measures forum began in Bonn at themid-year negotiation sessions in June and is scheduled toconclude in Durban. Its mandate is to put together a work programme to address the issue and consider thepossible establishment of a permanent forum.Considering the fact that no venue currently exists forcountries to present information, exchange views, andconsider solutions to potential challenges that resultfrom the implementation of burgeoning climatemeasures, the proposition of a permanent forum is aparticularly interesting prospect. The WTO has its dispute settlement body to considerinstances where such measures might violate trade rules.But affected countries can only exercise this option after   the measure has been adopted, rather than provide apotential instance for conflict avoidance. In addition, the WTO only addresses the violation of international traderules and would not consider the broad spectrum of potential consequences to economic development,impacts to the environment  –  including evaluation of the actual mitigation benefits  –  or impacts on society. These sustainable development dimensions areprotected under the UNFCCC, and such a forum wouldprovide a concrete process for reducing negative andmaximising positive impacts. The response measureforum takes place under the auspices of the Subsidiary Body for Implementation, one of the two principlenegotiating bodies of the Convention. LCA track weighed down by trade concerns Meanwhile, under the Ad-hoc Working Group on Long-term Cooperative Action, several trade-relateddiscussions continue. The first is related to the questionof competitiveness, where some countries fear thataction to reduce climate emissions will negatively impact their companies’ and industrial sectors’ competitiveness in international markets. In essence, many developedcountries say they will be at a disadvantage if somecountries with competing industries are required to doless than others to mitigate emissions at a global level.For their part, developing countries have concerns aboutthe potential use of trade measures by developed countries attempting to “level the playing field.” Poor countries argue that such measures could impact theireconomic and sustainable development. To pre-emptthe use of such measures, they are insisting that languageprohibiting the use of unilateral measures to addressclimate change be included in the new agreement.Similar language is included in a draft text on responsemeasures under the LCA. These discussions are taking place under a sub- category known as the “shared vision,” where parties also discuss the composite emission cuts for the world and how the total agreementbalances out.In a separate sub- group on “sectoral approaches” to mitigation, the topics of agriculture and bunker fuels  –   dirty fuel used in shipping and aviation  –  are back on thetable in a similar form to what was considered and thendropped in Cancun. The trade implications remain anobvious concern under both of these topics and arereflected in references in the draft texts. The agriculturetext proposes the creation of a work programme onboth mitigation and adaptation in the agriculture sector.Meanwhile, the bunkers discussion is oriented moretoward whether to advance discussions on climatechange issues related to global transport under theUNFCCC, rather than under the International MaritimeOrganization (IMO) and International Civil AviationOrganization (ICAO), as is currently the case.Finally, while the role of intellectual property rights inthe deployment and transfer of technologies for climatechange remains a concern for many countries, the issueis far from resolved. There is little indication from inter-sessional negotiations or meetings that Durban is poisedto make any decisions on this topic, which is among themost contentious subjects under the technology negotiations. It may, nevertheless, get some traction. Potential advances  While the Kyoto issue will be hogging the spotlight inDurban, there will still be many other decisions taken inan array of negotiating branches. For example, forwardmovement is expected as the Green Climate Fund isoperationalised and as it gears up for disbursement. With this issue resolved, the new Technology Mechanism will then have access to financing for its work on assessments, capacity building, and othersubstantive topics. Progress is also expected on theadaptation front, with the new strategy agreed to inCancun taking greater shape. This strategy is also poisedto receive financing for initiatives such as National Adaptation Plans.Discussions on mitigation in the search for a new agreement are unlikely to produce any major results.However, some progress could take place on themeasuring, reporting, and verification of nationalactions, as well as on International Consultation and Analysis  –  the two developing issues that wouldconstitute some form of compliance for a future regime.Currently, movement on both these topics is slow,almost to the point of being imperceptible  –  a fact thatis frustrating to many countries and observers in light of the conspicuous gravity of the global climate situation. Whether success in Cancun was reaped by the low expectations, the brilliant diplomacy by the COPpresident, or, simply, the tranquil atmosphere broughton by warm breezes and palm trees  –  then Durban is asprepared as any host could be. If one can take anything from the Cancun experience, it is not to be swayed by early reports of a deadlock. These two weeks set asidefor tedious negotiations can easily change at any time,for either better or worse; the real answer will only befound after the dust settles on 10 December.
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